AMERICA’S COLLEGE

PROMISE PR

OPOSAL

D R . JE F F R

I TT E R

BACKGROUNDOver 25 years of business, consulting, and leadership

experience.Over 10 years as an educatorDoctorate in business from Nova Southeastern University in Ft.

LauderdaleMasters in business from LIU in NY.Bachelors in business Baruch College CUNY in NY.Managing Partner: R Squared Group

STUDENT DEBT

OVERVIEWIn January, 2015 the President unveiled the America’s College Promise proposal to make

two years of community college free for responsible students, letting students earn the first half of a bachelor’s degree and earn skills needed in the workforce at no cost. The financial and staffing implications of such a change are enormous for both two-year and four-year schools. In addition, the changes for U.S. Colleges in terms of how they operate, financial institutions, Government oversight, and student opportunity and responsibility are significant. This presentation will review and help explain what the overall impact may be.

Overview of the PlanPresident Obama laid out the general components of the plan when he spoke at

Pellissippi State Community College, in Knoxville, Tenn., on Jan. 9, 2015. The federal government would pay three-quarters of the average cost of community college tuition- about $3,800 a year for two years-and participating states would cover the remaining cost. If all 50 states buy in, the Obama administration says 9 million students could benefit. The White House estimates that the initiative would cost the federal government $60 billion over 10 years.

THE IDEA IS NOT NEW!“The time has come to make education through the 14th grade

available in the same way that high school education is now available. This means tuition-free education should be available in public institutions to all youth for the traditional freshman and sophomore years or for the traditional two-year junior college course.”

Although it may sound similar, this statement was not uttered by President Obama. It was, in fact, a declaration made by the United States’ first national commission on higher education, the Truman Commission, in 1947.

WHAT OCCURRED FROM THE TRUMAN PROPOSAL

It laid the foundation for the landmark Higher Education Act of 1965.

Many state governments moved ahead with plans to expand public higher education, in particular by creating or enlarging community colleges, in the years after World War II.

Framing higher education as a public good, the commission argued that an educated citizenry provided the best hope for preserving democratic freedom, achieving economic security and even promoting world peace.

THE PROPOSALThe proposal, modeled in part on programs in Tennessee and

Chicago, promises to use federal and state dollars to eliminate the costs associated with tuition and fees at community colleges for students who enroll at least part-time and maintain a 2.5 grade point average.

The White House estimates that the free tuition program would cost $6 billion a year. But that money would simply replace the tuition students were already paying, not increase colleges’ revenue. States would be required to pay for one-quarter of this tuition subsidy. Some may raise that money by decreasing the direct subsidies they give colleges now, which currently cover approximately two-thirds of the cost of educating each student.

KEY GOALThe ability to provide a debt-free route to a college education

for all Americans willing to work for it.

THE CONCERNSPrivate Institutions could not compete.Small Colleges would closePublic Institutions would be vulnerable to Government ControlThese same concerns have been discussed with President

Obama’s proposal.Less CompetitionDiminished Markets.Higher education experts have questioned the "last dollar"

funding method, because only students who don't receive enough financial aid would benefit. In a sense, those with the least financial need would benefit the most from such programs

THE BENEFITSRenews the nation’s promise to provide educational

opportunity to all who are willing to work for it.It serves as a reminder that education is not just a private

benefit, open only to those who can afford it, but a public good worthy of investment.

The possibility for all citizens to participate in envisioning and constructing a better society.

THE QUESTIONS ABOUT SUCCESSOf all of the students who enrolled in public community college

for the first time in the fall of 2003, only one-quarter earned any kind of certificate or associate’s degree within six years. Another 12% earned a bachelor’s degree within that six-year period.

City University of New York’s Accelerated Studies in Associate Programs (ASAP), have doubled the graduation rate for participants. But at a cost: ASAP costs 60% more per student than the standard CUNY program.

AACC The American Association of Community Colleges (AACC) enthusiastically

welcomes President Obama's bold proposal to eliminate tuition for students in certain community college programs. Like the state and local initiatives it builds upon, the president's proposal dramatically underscores the importance of obtaining a postsecondary education in today's economy.

"AACC has been hard at work identifying the promising practices that our member institutions have implemented to increase student access and success. The president's proposal certainly fits into that category," said AACC President and CEO Dr. Walter G. Bumphus. "This is an exciting day for the nation's community colleges."

As the voice of the nation's community colleges, the American Association of Community Colleges (AACC), delivers educational and economic opportunity for 13 million diverse students in search of the American Dream. Uniquely dedicated to access and success for all students

TENNESSEEthe "Tennessee Promise," which Gov. Bill Haslam

announced last year in his State of the State address. Under the plan, Tennessee high school graduates – beginning with those graduating this spring – receive two years of tuition-free community or technical college in the state if they enroll full time and maintain a 2.0 GPA. The state will cover remaining tuition costs after other grants, including federal Pell Grants, are taken into account, under what is known as the "last dollar" funding method. So far, 57,000 students have applied for the program.

CHICAGOChicago also initiated a free community college plan in 2014,

which would require students to have a 3.0 high school GPA and have no need for remediation upon entering college. 

STARBUCKSStarbucks' announcement that it's offering a free college education to all

employees has received criticism from several educational policy experts about the scope of its benefits.

The company said Monday that the program, offered to all 135,000 of its U.S. employees, would give full tuition reimbursement to employees who work at least 20 hours a week and are enrolled in Arizona State University's online program as juniors or seniors starting this fall.

Freshmen and sophomores are eligible for scholarships as well, but not full reimbursement.

Under the program, students must first complete 21 credits at ASU — or seven courses — before they are eligible for a payout.

For online students, ASU undergraduate tuition ranges from $480 to $543 per credit hour, regardless of residency status and without additional program fees. That means 21 credits would cost at least $10,000.

STARBUCKS CON’TJuniors and seniors will receive $2,420 per semester in this

upfront scholarship, and Starbucks will reimburse the difference. Freshmen and sophomores will get a scholarship of $1,267 per semester with no Starbucks reimbursement, The Chronicle reported.

The scholarship represents 22% of tuition costs for freshmen and sophomores and 42% of tuition costs for juniors and seniors, Jaime Riley, Starbucks spokeswoman, said in an e-mail to USA TODAY Network.

The Starbucks program does not truly address the cost of college and is more like a "quasi-tuition reimbursement plan," said Rachel Fishman, education policy analyst with the New America Foundation.

"In this scenario, you have the employer taking on some of the costs, but the costs are shifted on the students until they can complete," Fishman said in an interview with USA TODAY Network.

SCOTLANDin 1999, Scotland voted in favor of creating its own parliament, and that

governing body got the responsibility for higher education. Scotland decided college should be free up front, even if students had to contribute after graduation. Beginning in 2001, tuition fees were abolished, and college graduates had to pay £2,000, around $3,000, to the Scottish government the year they graduated if they were earning at least £10,000, or $15,000, per year.

In 2008, the Scottish government, led by the pro-independence Scottish National Party, got rid of the post-graduation fee. College in Scotland became completely free. Students were eligible for government support to pay living expenses, too, through grants and loans adding up to £7,250, or about $11,200, per year for students from the poorest families.

One argument in favor of free tuition is that it could encourage students to apply to college who otherwise would think they couldn't afford it. "Everyone can afford college because it's free" is a clearer message than "college might look expensive, but you probably won't end up paying what colleges say they charge."

SCOTLAND CON’TThe main criticism of Scotland's free tuition is that it's

regressive: Students still take on some debt to pay living expenses even though tuition is free. And the burden of that debt falls more heavily on poor students than others.

Students in Scotland from families making less than £30,000 per year, or about $46,000, took out 70 percent of the student loans borrowed that year, even though those students make up only 45 percent of the college-going population, according to an analysis by Lucy Hunter Blackburn, a former head of higher education for the Scottish government who is a consistent critic of the free tuition plan.

Most of the arguments about Scotland's system are about whether it's more or less generous than the way students elsewhere in the UK pay for college. But the debate over higher education in the US is now confronting some of the same issues.

THE CLINTON PROPOSAL“New College Compact” with the primary aim of allowing students to attend in-state colleges or universities

without ever having to take out a loan.About half the cost of Clinton’s $350 billion plan will go towards grants meant to ensure “tuition without

borrowing” through federal cash incentives provided to states.

Under Clinton’s plan, students would also get free tuition at community colleges; an initiative that has also been floated by President Obama.

Interest rates on current loans could be reduced by allowing for refinancing at current federal rates; a move Clinton says will save thousands of dollars in interest payments over the lives of loans for an estimated 25 million borrowers.

Clinton contends her plan could be paid off in 10 years by closing tax loopholes and deductions often leveraged by the wealthiest Americans.

The Clinton proposal comes amid a flurry of similar proposals from Democratic presidential candidates seeking to appeal to the younger generation of voters burdened by debt from higher education.

REFERENCEShttp://www.usnews.com/news/articles/2015/10/22/biden-calls-for-4-years-of-free-college http://www.usnews.com/news/articles/2015/01/09/president-obama-announces-plan-for-tuition-free-community-college http://www.vox.com/2015/10/22/9592460/college-tuition-free-scotland http://www.prnewswire.com/news-releases/education-leaders-join-national-campaign-for-tuition-free-community-college-300139345.html http://www.ibtimes.com/how-bernie-sanders-free-college-tuition-proposal-could-force-hillary-clinton-embrace-1929612 http://www.usatoday.com/story/news/nation-now/2014/06/17/starbucks-free-college-tuition-problems/10678819/ http://www.golocalprov.com/lifestyle/its-all-about-education-free-college-tuition-why-just-community-college http://www.bbc.com/news/world-us-canada-32891481 http://www.inquisitr.com/1531316/germany-extends-free-college-education-to-all-students-in-the-u-s/

FUTURE TRENDS AND IMPORTANT ISSUESStudents do not value an education if theyhaven’t paid for it.Job markets are already flooded — will thisactually help students get jobs?“Free” education is not really free — taxpayerswill have to pick up the slack.I didn’t have America’s College Promise andit worked out all right for me.Couldn’t this actually limit student access tocommunity colleges by driving up fees andpricing community colleges out of the market fortypical students?

CONTACT INFORMATIONDr. Jeff RitterJeff.ritter@rsquared-group.com561 376 9667www.rsquared-group.com

EINSTEIN

THANK YOUQuestions?